LNG

Italian energy company Eni has retained investment bankers to find buyers for its Australian natural gas, LNG and oil assets as it aims to concentrate on other markets in the years ahead such as the Middle East and Mozambique in southeast Africa.

Executives said the investment banking arm of New York-based Citgroup Inc. was seeking interested parties in the Australian assets.

Eni has offices in Perth, Western Australia, and in Darwin, in the Northern Territory as well as Dili, in Timor-Leste where it also owns assets.

In Australia, Eni owns and operates the Blacktip gas field, supplying gas to Australia’s Northern Territory for power generation and industrial uses.

In the Joint Petroleum Development Area between Timor-Leste and Australia, Eni holds a 40 percent shareholding in the Kitan Oil Project, and an 11 percent interest in both the Bayu-Undan Gas Condensate Project and the Darwin LNG plant, which liquefies feed-gas from the Bayu-Undan fields in the Timor Sea.

The Kitan oil field is located 170 kilometres offshore Timor-Leste coast and 550km northwest of Darwin.

Eni also has a 100 percent interest in permits WA-33-L and WA-69-R in the Bonaparte basin offshore Australia’s Northwestern coast where the the Blacktip gas field and the Penguin gas discovery are located.

The Blacktip gas field is located in a water depth of around 50 metres. The facilities are comprised of an unmanned production platform, an offshore pipeline of around 110 kilometres connected to the Yelcherr Onshore Gas Plant in the Northern Territory.

Eni is led by Chief Executive Claudio Descalzi who was reappointed recently to his CEO post for a third term, and analysts said he would now embark on a restructuring of assets to help the company navigate the current slump.

Australian company Santos agreed to sell 25 percent of the Darwin LNG facility and the Bayu-Undan gas field off Northern Australia to South Korea’s SK E&S for US$390 million after agreeing to buy-out the interests of ConcocoPhillips in the Northern Territory and the Timor Sea.

The Eni assets in northwest Australia and the Timor Sea could be worth more than US$900 million.

Argentine oil and gas producer, Yacimientos Petroleiferos Fiscales (YPF), has sold overseas bonds for the first time in more than a year amid a slow return of investor confidence as the company starts small-scale LNG exports and the nation’s huge Vaca Muerta shale basin continues to be developed.

YPF issued $500 million of 10-year, dollar-denominated notes to yield 8.75 percent. The sale on June 24 was managed by the US Citigroup, the UK’s HSBC Holdings and Itau Unibanco Holdings SA of Brazil.

Bankers said that proceeds from the sale would go towards working capital and refinancing existing debt.

State-owned YPF is traditionally among the country’s biggest corporate borrowers and it hadn’t issued bonds recently in international markets as an economic slowdown and a currency crisis affected investor confidence.

YPF is the largest investor in the Vaca Muerta shale basin of onshore oil and gas reserves in the northwest Argentine province of Neuquen.

Covering an area the size of a small European country, it has become one of the world’s leading shale basins and has attracted international companies such as US majors ExxonMobil and Chevron Corp., Qatar Petroleum, French major Total and Equinor of Norway.

Argentina also loaded its first shipment of LNG on June 3 for export at the “Tango FLNG” facility deployed at the Argentine port of Bahia Blanca.

YPF said the shipment included 30,000 cubic metres of natural gas from the Vaca Muerta shale.

An LNG carrier, the Malta-registered and Japanese-built “Fuji LNG”, lifted the cargo at Bahia Blanca after arriving on June 2 and then proceeded to Cheniere Energy’s Sabine Pass plant in Louisiana, arriving on June 24, according to shipping data.

The “Tango FLNG” plant is chartered under a 10-year agreement from Belgian shipping company Exmar.

The vessel is the former floating liquefaction unit, “Caribbean FLNG”, constructed for a cancelled venture in the South American state of Colombia and renamed before being sent to Argentina.

YPF did not at first specify the destination of the shipment, though said it was being helped by the marketing arm of US exporter Cheniere.

Argentina’s medium-term aim in the LNG sector is to halt its own LNG imports, which will number at least nine large-scale cargoes or more for the Southern Hemisphere winter, and to become an exporter.

Growing natural gas production from the Vaca Muerta shale will eventually meet all of the nation’s energy requirements and leave a surplus for export.

However, production costs for shale will have to be reduced to make exports economic and huge investment is needed in infrastructure to handle large-scale gas volumes and onshore liquefaction, though the floating LNG project is viewed as a good introduction to the export market for YPF.

The “Tango FLNG” plant will produce up to eight cargoes per annum from the Vaca Muerta supplies.

The shale-gas production has also enabled the resumption of pipeline supplies to neighbouring Chile.